Despite the many services available to them, those who are homeless find it extremely difficult to move permanently out of shelters into stable, long-term housing. The difficulties they experience are varied, but all share the problem of needing money to pay the first and last months’ rent and initial utility hook-ups. Most homeless people also lack the basic financial literacy and money management skills to live on their own successfully. The result is predictable: a two-year study of shelter recidivism in Ottawa, published in 2007, showed that 79 percent of those who do find a route out of the shelter system were back in it within a year.

But a project developed by Social and Enterprise Development Innovations is showing evidence that fostering a savings culture among shelter residents and providing support to connect them to the mainstream economy is possible and crucial to helping them move out of shelters and into their own homes. Now entering its sixth year, the Independent Living Account Program (ILA) has supported 350 individuals from eight Toronto transitional housing facilities. Over 300 of these individuals have opened bank accounts,  and collectively they have saved over $100,000. One hundred and forty-seven participants have graduated from the program and moved into permanent housing.

Begun as a pilot program in 2005, the ILA helps homeless participants open a bank account, provides them with practical financial literacy education and enrols them in an incentivized savings program that provides $3 for every dollar they save, as long as they use the money for housingor job-related purposes. With regular case management by shelter staff, participants establish a savings goal of up to $400 over a 5to 12-month period and are encouraged to make regular savings deposits. The program costs between $2,500 and $3,000 per participant, including matched funds.

The record of the first pilot program shows the encouraging possibilities. Of the 129 people who enrolled, 78 percent opened bank accounts, with collective savings totalling more than $33,000. More than half (57 percent) moved out of their shelter into independent living.

Fostering a savings culture is crucial to helping shelter residents.

Furthermore, there was evidence of longer-term benefits. Follow-up interviews conducted in late 2006 found that those who participated in the ILA were less than half as likely to return to the shelter system. And 82 percent of those who had found housing felt secure that they would remain housed independently for the rest of their lives, while their labour force participation rose from the half who were employed while living in the shelter to 72 percent a year later, with more fulltime employment.

The secret to the ILA’s success is its holistic approach to the financial needs of shelter residents. The program looks beyond minimum income needs to address the critical role that savings and saving behaviour plays in providing people with a financial safety cushion for emergencies and periods of transition, enabling them to invest in their own future.

Too often, our social policies and programs ignore the fact that savings and asset accumulation provide the same economic security, mobility and opportunity for low-income people as they do for other Canadians. To the contrary, they often strip low-income people of the very assets they need to move forward in life " in most provinces as a condition of receiving social assistance, for example. Many programs and tax policies aimed at fostering savings are also designed or delivered in ways that effectively preclude lowincome Canadians from benefiting. Tax deductions for retirement and education savings, for example, benefit only those who make enough money to pay income tax.

Addressing the basic, emergency income security needs of the homeless will always be an essential pillar of Canada’s social architecture. But we must also recognize the importance of enabling everyone to build the savings and assets they need to acquire education and job training, start businesses and access safe and secure housing. These are the building blocks of opportunity for all of us, no matter what our income.


Elizabeth Mulholland is the CEO of Social and Enterprise Development Innovations (SEDI), and Barbara Gosse is SEDI’s director, saving and asset-building initiatives. SEDI is a charitable nonprofit organization that works to expand economic opportunity for low-income Canadians through program and policy innovation. Since 1986, SEDI has worked with businesses, governments and more than 1,000 nonprofits across Canada on financial literacy, savings and asset building, and entrepreneurship initiatives. The Independent Living Account Program receives funding support from the City of Toronto, the TD Bank Group and private donors.